Analyst Says Costco (COST) 'Story Could Work' Under These Conditions

We recently published 10 Stocks Moving On Key Analyst Calls. Costco Wholesale Corp (NASDAQ:COST) is one of the stocks analysts were recently talking about.

David Bellinger, Senior Analyst at Mizuho Securities, said in a program last month on CNBC that the US consumer is doing “fine,” but the problems Costco is facing are specific to the company. Here is what the analyst said at the time:

“Costco Wholesale Corp (NASDAQ:COST) reports, we already know that they’re going to print about 6% same store sales in the US that excludes the more volatile gas category, and then globally that’s about 6 and a half%. So very good numbers. We just don’t think this is enough for Costco Wholesale Corp (NASDAQ:COST). So a bit of a deceleration from the 8% last quarter. We view this as the consumer’s fine in the US, but this is more of a Costco Wholesale Corp (NASDAQ:COST)-specific story where we see them going through this mini investment cycle. You’ve got elevated operating expense growth. Last quarter was double digits. We’re looking for something similar. So, you’re just not getting the flow through to the bottom line that we think you need for Costco Wholesale Corp (NASDAQ:COST), especially when it’s paired with this very elevated valuation. But, if we step back and just look at how the consumer is handling tariffs to date, we think they’re fine. We want to see that non-foods business start to accelerate again. And then that, that’ll pair with this high valuation. It’ll make more sense. Maybe then at that point you start getting some earnings upside revisions and then the story could work. But until then, we’re still neutral on this name.

Costco beat fiscal Q4 earnings and revenue estimates. However, same-store sales showed sequential deceleration.

Patient Capital Opportunity Equity Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its second quarter 2025 investor letter:

“We initiated an options position in Costco Wholesale Corporation (NASDAQ:COST) (COST 1/16/26 P960) during the quarter, purchasing at-the-money puts with a 2026 expiration. We’ve consistently highlighted the risk lurking in the “overpriced compounder” segment of the market, and we view Costco as a prime example. The stock is currently trading at 54x earnings despite growing only at a mid-single-digit rate. While Costco is undoubtedly a well-run business, we believe paying more than twice the market multiple for a low-growth, low-margin retailer is difficult to justify. At some point, we expect the market to reassess the premium valuation being placed on Costco’s fundamentals. When it does, we believe the stock could face meaningful downside from its current all-time high multiple.”

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Disclosure: None. This article is originally published at Insider Monkey.